UNCLASSIFIED U S Department of State Case No F-2010-06143 Doc No C17528310 Date 01 15 2014 RELEASED IN FULL 3 December 19 97 TO Please see attached listing 1 USDEL Kyoto - Mark G v From Subject 'Third Conference of the Parties to Jie Climate Convention Update No 1 Rcpor1 on Aotiviti s Meetings on December 2 3 1997 r 4 0 This unofficial and uncleared report covers various activities and meetings at t11e Third Conference of the Parties COP-3 which is being held in Kyoto between November 30 and December 11 nd 1997 This edition covers events from the afternoon of December 2 through the evening of December 3n1 Although it is not classified this report is intended for the use or distribution outside of the U S Government This report also contains details about the meetings held by the Committee of the Whole on QELROS during the closed sessions on December 2nd prepared by EPA's Sharon Saile In addition I am forwarding a copy of the language being discussed in the CQrridors on a draft national security provision whicb had been promised in Update No 3 but which was not included Also noteworthy is a report on CODEL Hagel's meeting with Chinese representatives on December 2 which was prepared by Embassy Beijing EmboffRoben Boynton The ECO for December 3'' is being sent as part of a supplement to this update although I am including a copy of the more respected EARTH NEGOTIATIONS BULLETIN for Dec 2 The final paragraphs of this report may be used as a summary as appropriate or desired COP-3 U11date No 4 Dec 2 3 Canada and New Zealand Announce Their Reduction Targets Six Gas Basket Endangered Love Thy Neighbor Cnm1da Displnys its Grcc_n Target the Kiwis also Propose to Reduce An important highlight of Dec 2nd was the announcement of a target by both Canada and New Zealand Canada indicated its suppon for a reduction of three percent by 2010 with an additional five percent cul by 2015 In WSCANZ on Dec 2 the Canadians indicated that these reductions would Lake place in budget periods corresponding to the U S formulations The Canadians also endorsed joint implementation with credit and our other flexibility mechanisms and came out in favor of developing country commitments Still we were somewhat perplexed by the Canadian announcement After assening strongly to the Canadians the importance of marclung in lock step with regard to a target this announcement appears to us merely a reflection of the sometimes knee-jerk'' reaction of the Canadians to putting some distance bc woen themselves and he U S on many mullilateral issues In this case Prime Minister Chretien's desire to have a greener target than us REVIEW AUTHORITY Alan Flanigan Senior Reviewer UNCLASSIFIED U S Department of State Case No F-2010-06143 Doc No C17528310 Date 01 15 2014 UNCLASSIFIED U 3 D partment of State Case No F-2010-06143 Doc No C17528310 Date 01 15 2014 New Zealand's announcement of a five percent reduction by 2010 should have been accorded greater accolades than it received Instead because of the small print which outlined the conditions for this reduction the announcement was savaged in ECO and by the usual gaggle of pro-European NGOs generally Indeed Simon Upton the Kiwi EnvirOllment Minister indicated that this proposal was conditioned on the inclusion of at least three grccnhOuse gases GHG provision for international emissions trading no mention of Joint Implemcnwtion ll the appropriate inclusion of carbon sinks flexibility with regard to the choice of policies and measures and provision for developing countries to accept emission reduction commitments in the future Much Activity in the Negotiating Bodies and Contact Groups Throughout Dec 2 and 3' there was much activity and possible movement in a number of areas In addition to a COP plenary meeting on Dec 3'd tl1e negotiating body chaired by Ambassador Estrada met three times while the groups on Article 4 1 dealing with Article 12 and 13 of tl1e text and the one on institutions met twice · Moreover various contllct groups met on national securiry exemption a JUSCANZ group emissions trading JI and sinks The developments in each of these groups or by topics of interest arc as follows COP Plennry Both the EU amendment on changing tl1e rules for approval of protocols by a three qllllrters vote and a Kuwaiti proposal to expand Annex I financial obligations under the Convention were discussed at the plenary on Dec 3'• Infonnal consultations on both items are to be held by Hungary and Senegal respectively In addition proposals 10 change or alter the status of the Czech and Slovak Republics plus Turkey were also debated We were something of the sku11ks at tlie party concerning Turkey's application to be removed from the lists of Parties in Annex I and Annex II essentially making Turkey an OECD member We suggested that the matter be postponed for additional consideration the question being one in our view of ensuring tliat Turkey opt to join Article IO for countries which would voluntarily take on an en1issions cap prior to being excused from the obligations of Annex I should Turkey decide to ratify tl1e protocol Another plenary issue whicl1 we spoke rather vehemently about was the seating oftlic Federal Republic of Yugoslavia As FRY does not qualify for membership in t11e Convention because it is not a member of the UN one of its affiliated bodies or a signatory on the International Court of Justice FRY should not have been accredited to lie Convention We are soliciting additional advice from Las to how to proceed Meanwhile the Secretariat is seeking guidance from the Legal Advisor at the United Nations prior to tl1c next COP Plenary on Dec 5 Budget Issue The budget concep while still opposed by some countries appeared to gain ground on Dec 2 It appears that the G-77's oppostion is based largely on tactical considerations In any case the term has come to be identified too closely witl1 t11e U S Accordingly Estrada asked 1he Brazilian delegate Gylvan Meira to propose a new name for tltis concept wltich Gylvan undenook 10 do Differentiation In the first discussion of this topic since the U S statement on Dec 1 most proponents merely restated tlteir well-known positions The U S offered tl1at it was not bringing forth a specific proposal at this time We said tl1at in our view a differentiated outcome needed to principles to work it would have to have set limits and the targets would have to be decided at Kyoto No loopholes In addition we wanted to listen to the views of other Parties and 10 solicit some suggestions from them Switzerland's Romera was given the task of consulting with other Parties 011 tl1is topic and Romera circulated a questionnaire which has now been collcclcd with the various answer being eollated Military Exemption Provision As indicated in Update No 3 our two DOD reps have carefully orchestrated this issue which in any case looks very problematic We are currently seeking views on some proposed language which would treat this potentially volatile issue as a methodologies question UNCLASSIFIED U S Department of State Case No F-2010-06143 Doc No C17528310 Date 01 15 2014 UNCLASSIFIED U S Dopartmeol of Slato Case No F-20 0-06143 Doc No Cf75283f0 Dato Df s201 1 GreenhOuse Gas Coverage It looked like we would lose our proposal for a GHG based on six gases at the QELROS discussion last night So strenuous were the voices in favor of a three b t approach especially from the EU and Japan against only two in favor of a six gas basket the U S and Norway that Estrada indicated that the tendency had now shifted strongly in favor of three gases for this protocol On Dec 3'd following a pilot but stem appeal from Dr Pershing before JUSCANZ the issue was kept alive for additional discussion on the following day And it was All of JUSCANZ with the exception of Japan and Switzerland the Queen of tlie EU wannabees spoke up in favor of 6 GHG coverage when the mat Cr resumed for discussion on Dec 3n1_ Sinks In what has been to_ date the most intensively discussed issue it was after all the reason why the AGBM was suspended on October there were potentially significant developments on Dec 3 ' A report is due to be issued tonight with the apparent recommendation to the chair endorsing a concept which we had decided not to pursue earlier because of the bad message it would send According 10 a key USDEI member attending the talks if the recommendation is endorsed by the Chair and then by the COP the U S could have a reduction of over two percent It is the fact that this would be a reduction which is apparently keeping AOSIS supporting this concept in contrast to its earlier opposition or perhaps it was tl1e lunch we hosted for six leading AOSIS members today Compensation The Saudi OPEC poison pill called compensation was addressed at the night meeting on Dec 2 with the expected countries both for and against The most compelling argument made against this proposal came from Poland The Polish delegate indicated that his parliament would not approve an agreement that contained a provision in which Poland might have to compensate Saudi Arabia - a country wilh five times the per capita income of Poland Clean DevcloJ ment Fund and Joint Implementation The biggest surprise of Tuesday night was the discussion involved in taking up what the G- 77 called its own idea called the clean development fund although the idea actually comes from the Brazilian propos l Tl1e G- 77 extolled its virtues while the U S indicated we could not accept this fund in the oontcxr of the G-77 proposal Then Brazil got up and stated that the concept could be adjusted and might be better-suited as an inceptive mechanism rather than one drawing funds from non-compliance Brazil conducted consultations on this matter on Dec 3 ' Although Brazil has changed some of its initial views progress was made in working this concept into the article on n Among the loudest critics among Annex I are Germany and Japan while India and Cilina are among those non-Annex I countries who find aspects of the concept troubling Institutional Issues The G-77 and China continue to try to insert the Berlin Mandate mantra into whatever places tl1ey can in the various articles being discussed in tltis negotiating group under the Chair ofTakao Shibata Among the issues t ickled on Dec 2 3 was tliat dealing with entry into force provision Al the moment t11c debate is over the number of countries which might be required and tlte percentage of emissions which should be required for the protocol to come into force The numbers 50 and tltree gigatons are the propos ils that are currently tabled Article 4 1 Although a few minor paragraphs were approved this remains an heatedly debated issue We are working on the paragraphs on technological transfer and may find an early fix The G-77 still wants all references to policies removed Policies and Measures PAMs No formal group has addressed this issue altlmugh in two bilatcrals with the EU troika its pit b ll Ben Metz of the Netherlands has not budged an incli Alt tough he continues to assen that we the U S and the EU arc not fall a Jart on this issue we have clarified that there are serious differences on this question which remain to be settled Emi 1sions Trading A USDEL team met with the Germans on Dec 3 i to try to soften their criticism of this iinport ant flexibility instrument However at a long meeting on this topic both France and Japan UNCLASSIFIED U S Department of State Case No F-2010-06143 Doc No C17528310 Date 01 15 2014 UNCLASSIFIED U S Department of State Case No F-2010-06143 Doc No C17528310 Date 01 15 2014 i f' l b attempted to introduce proposals for a rigorous and burcaucatic syscem of investigation monitoring and compliance into che discussion In addition both countries appeared to favor trading based only on an auction basis Base Year In part because they arc now feeling pressure on U cir target the Japanese asked for OIII views on changing the base year from 1990 to 1995 This would give them more flexibility to meet lhcir target We indicated tliac the only possible flexibility in this regard that we arc considering is wiU1 a mulliycar conte xt such as 1990-95 We had not addressed the issue of actually changing the baseline at the present time Developing Country Issues Evolution The Japanese tell us that Minister Ohki's co11Sultations with several developing countries leaves him with tile distinct impression lhal evolution even if encapsulated in a Mandate fonnulation is impossible with most developing countries This view comes from his discussions with Q ina India Indonesia and Malaysia on Dec 3rd Of these countries lite hardest line was taken by China and Malaysia with Indonesia actually speaking out in favor of some kind of review mechanism We will try to meet with both India and Indonesia tomorrow Dec 4th Comment It is clear that Japan is feeling pressure from its weak targcc which if all sLx principal greenhouse gases are used would by our calculations result in a growth target rather than the current 2 5 percent reduction effort The Japanese asked us lo reconsider their proposal for handling the three additional gases with specialized criteria We had looked at this idea briefly and were 1101 impressed However we have established a comact group between our two delegations to examine tile issue more carefully Similarly we have established contact groups with Japan to discuss both our differing views on emissions carrots and one on clle Japanese proposal to offer some incentives or carrots to developing countries in an ciion to bny their acceptance of other aspects of the agreement UNCLASSIFIED U S Department of State Case No F-2010-06143 Doc No C17528310 Date 01 15 2014 UNCLASSIFIED U S Department of State Case No F-2010-06143 Doc No C17528310 Date 01 15 2014 f' l The following J aragraphs can be u ed as a summary as desired or ap1iropriatc COl'-3 U11datc No 4 Dec 2 3 Canada and New Zealand Announce Their Reduction Targets Si Gas Basket Endangered nd An important highlight of Dec 2 was the announcement ofa target by both Canada and New Zealand Canada indicated its support for a reduction of three percent by 2010 with an additional five percent cut by 2015 In JUSCANZ on Dec 2 the Canadians indicated that these reductions would take place in budget periods corresponding to the U S formulations Tl1e Canadians also endorsed joint implementation with credit and our other flexibility mechanisms and came out in favor of developing country comntitme11ts New Zealand's announcement of a five percent reduction by 20 IO should have been accorded greater accolades than it received Instead because of he small print which outlined the conditions for this reduction the announcement was savaged in ECO and by the usual gaggle of pro-European NG Os generally Indeed Simon Upton the Kiwi Environment Minister indicated that this proposal was conditioned on the inclusion of at least three greenhouse gases GHG provision for international emissions trading no mention of Joint Implementation JI the appropriate inclusion of carbon sinks flexibility wiU1 regard to the choice of policies and measures and provision for developing countries to accept emission rcduclion commitments in the future Throughout Dec 2nd and 3 there was much activity and possible movc1nem in a number of areas Budget Issue The budget concept while still opposed by some countries appeared to gain ground on Dec 2 It appears that the G-77's opposition is based largely 011 tactical considerations In any case the term has come to be identified too closely with the U S Accordingly Estrada asked the Brazilian delegate Gylvan Meira to propose a new name for this concept which Gylvan undenook to do Differentiation In the first discussion of this topic since the U S statement 011 Dec I most proponents merely restated their well-known positions The U S offered that it was not bringing forU1 a specific proposal at this thne We said that in our view a differentiated outcome needed to principles to work it would have to have set limits and the targets would have to be decided at Kyoto Military Exemption Provision Our two DOD reps have carefully orchestrated this issue which in any case looks very problematic We are currently seeking views on some proposed language which would treat this potentially volatile issue as a methodologies question Greenhouse Gas Coverage It looked like we would lose our proposal for a GHG based on six gases at the QELROS discussion last night So strenuous were the voices in favor of a three basket approach especially from the EU and Japan against only two in favor ofa six gas basket the U S and Noiway that Estrada indicated that the tendency had now shifted strongly in favor of three gases for this protocol On Dec 3rd following a pilot but stern appeal from Dr Pershing before JUSCANZ the issue was kept alive for additional discusston on the following day Stay tuned I UNCLASSIFIED U S Department of State Case No F-2010-06143 Doc No C17528310 Date 01 15 2014 UNCLASSlf § U -- DeE_af ment_ f_9tate__ ase No F-2010-06143 Doc No C17528310 Date 01 15 2014 7 Compensation The Saudi OPEC poison pill called compensation was addressed at the night meeting on Dec 2 with the e q ected countries both for and agai11St The most compelling argument made against this proposal came from Poland The Polish delegate indicated that his parliament would not approve an agreement that contained a provision in which Poland might have to oompcnsate Saudi Arabia - a country with five times the per capita income of Poland · Clean Development Fund and Joint Im1 lementation The biggest surprise of Tuesday night was the discussion involved in taking up what the G-77 called its own idea called 11 c clean development fund although the idea actually comes from the Brazilian proposal The G-77 extolled its virtues while the U S indicated we could not accept this fund in the context oflllC G-77 proposal Then Brazil got up and stated that the ooncept oould be adjusted and might be better-suited as an inceptive mechanism rather than one drawing funds from non- ompliance Brazil conducted consultations on this matter on Dec 3 ' Article 4 1 Although a cw minor paragraphs were approved this remains an heatedly debated issue We arc working on the paragraphs on technological transfer and may find an early fix The G-77 still wants all references to policies removed Emissions Trading A USDEL team met with the Germans on Dec 3 ' to tty to soften their criticism of this important flexibility instrument However at a long meeting on this topic both France and Japan attempted to introduce proposals for a rigorous and bureaucatic system of investigation monitoring and compliance into the discussion In addition both countries appeared to favor t_rading based only on an auction basis Han1bley UNCLASSIFIED U S Department of State Case No F-2010-06143 Doc No C17528310 Date 01 15 2014 I